Category Archives: Laguna Beach Real Estate

Market update for the first two months of 2015

Some interesting facts to think about:

The number of sales is up more than 15% from a year ago. Given the lower inventory this is very impressive.

Inventory is still below what it was at same time last year but the number of Pending Sales (sales in escrow) is up more than 20% from a year ago. Again, given the poor inventory this is very impressive.

From the statistic it shows it’snot the best time to sell the higher priced homes. There are currently 66 homes listed ‘For Sale’ above $4,000,000 and in the first two months of this year only two have closed escrow. Both those closed sales happen in January so presumably they actually went into escrow in 2014. There are only two Pending Sales priced above $4,000,000. Lastly, in February the most expensive home sold for $3,200,000.

Bragging on Surterre. Consider this: there were 22 homes sold in February. Surterre represented six of the sellers for a 27% market share and seven of the buyers for a 32% market share.

Loans: Rates are beginning to rise a little in anticipation of the Fed raising rates this summer or fall. However, rates are still quite low with fixed rates hovering around 4%. ARM rates are lower.

Jumbo loan programs are plentiful with qualifying guidelines loosening up and stated income programs are available – Call Rick Cirelli, (949) 413-5091 for more information

Tucson Daily Citizen: March 1961: “Thinking big: Cowboy actor Pat Hawley, 39, leaves the county recorder’s office at Santa Ana, Calif., yesterday after filing a claim to the entire city of nearby Laguna Beach, Hawley, who last month staked a claim to most of the Laguna Beach ocean frontage because he says “Nobody knows who owns it, now says that part of the downtown land also is in question, so he’s claiming the whole town. The actor in a big-hearted gesture today offered to sell back to residents this beach city–for $90 million. He filed a notarized claim at the Santa Ana County Courthouse covering all the ground of and “any buildings, parks, public of- the wealthy city houses, business offices, schools and chicken coops therein.” The claim also covered all mining and mineral rights in .the city. Only last month Hawley laid claim to a valuable 3,000- foot stretch of beach in the city after he heard city officials were trying to find its owner so the city could buy It for a public park. Hawley, drawing on his knowledge of squatters’ rights learned from acting in TV westerns, staked out the beach section. The city ever since has been trying to disprove his claim. His latest land grab was inspired he said, when he learned a water main broke under a bank in the city last week and officials were unable to find the owner of property, which the lines crossed. With the care of a planned infantry assault, Hawley, a father of five, got his family and one friend to stake out and guard the four borders of the city early yesterday. Then he showed up at the county recorder’s office where Deputy Mrs. Lillian Edgar gasped “What”!? “the whole city?” She called assistant recorder Wylie Carlye. “My,” said Carlyle. “you are claiming quite a bit”. Carlyle then called County Recorder Mrs. Ruby McFarland who carefully read the claim. “It’s a properly executed document and I can’t refuse to record it,” she said. “That will be a $2.80 filing fee.”

LA Times: March, 1961: Laguna Beach Ca.: Hawley Tricks Local Citizenry “Homesteader Pat Hawley again has outwitted harassed city fathers of this seaside artist colony simply by being an early riser. Hawley, a television bit player , claimed the entire beachfront of the 238-square-mile town of Laguna resort under the Homestead Act, after learning that no one actually knew who had title to a right of way traversing it . Under the act a claimant may move seven- cubic yards- of earth within 60 days to make the claim valid. City officials countered by barricading barricaded all entrances to the public beach. Hawley made a public announcement that he would move the earth at 10 a m the following day. Then he rented a two-ton truck and drove onto the Beach before dawn via a non-barricaded alley. He had two other men loaded the truck with twice enough sand to meet the requirements of the Homestead Act .When- police arrived at 10 am on Tuesday they found Hawley , smiling , standing- next to the huge mound of sand he had moved”.

Old Top of the World – 3,000 sqft home with huge panoramic views of OC canyons and mountains. $1.6m. Request pictures if you’re interested. A really unique and special place. Will come on market in March.

According to a recent survey by Zillow, self-employed borrowers generally have higher incomes than salaried workers but they have more difficulty qualifying for a mortgage. Judging by the number of people that contact me after being denied a loan elsewhere, I don’t dispute this fact.

Zillow also reported that salaried workers that use their website generally get 10 responses from lenders for every six responses self-employed borrowers receive, adding credibility to the fact that self-employed borrowers get turned down more.

It’s not due to income. The self-employed customers that use Zillow’s website have an average household income of $145,000 compared to $80,000 for the other borrowers. And the median property value for mortgage requests by the self-employed is only slightly higher at $352,000 compared to $315,000 for the other borrowers. Furthermore, Zillow’s analysis also found that self-employed persons have experienced rising household incomes up 28% over the past two years, while salaried borrowers who visit Zillow’s website are up only 17%.

From these statistics you would think that self-employed borrowers with higher incomes are better-qualified than salaried borrowers yet, they are turned down more often.

The Answer:

The short answer is that many loan officers, processors and underwriters just don’t know what they are doing when it comes to self-employed borrowers! It’s much easier to process and underwrite a loan for a salaried, employed worker than it is for a self-employed business owner.

To process and underwrite a self-employed borrower it takes a lot more training, knowledge, and expertise. In most cases minimum of two years personal and business tax returns plus a Year-To-Date Profit & Loss Statement must be analyzed. And, many self-employed borrowers own more than business. There could be Partnerships or partial ownership in multiple businesses too. Tax returns will be required for each entity in which the borrower owns 25% or more. A thorough knowledge of tax return analysis is required to know which sources of income can be used to qualify, whether certain expenses can be added to or deducted from the borrower’s income, etc. And in most cases the income must be averaged over a two-year period.

Next, if the loan officer, processor and underwriter aren’t properly trained and don’t work with self-employed borrowers on a regular basis, they won’t likely have the expertise to properly analyze the income and arrive at the proper figures to qualify the borrower. A self-employed file takes much more work than a salaried workers file.

Another factor is that bigger banks and mortgage lenders tend to centralize their processing and underwriting services in distant locations where their staff has no direct contact with the borrower. Accordingly, there is no personal relationship or rapport established with the borrower.

Much of my business is referred to me after someone has had their application declined elsewhere. And the majority of the time I am able to obtain an approval where others have failed. Being located in a high-priced market where the majority of my applicants are self-employed requires me and my staff to have a thorough knowledge of tax return analysis and lenders underwriting guidelines.

Providing experienced and local customer service is the key to getting the self-employed applicant approved.

It’s exciting to see so many Jumbo products returning to the mortgage market, including even a “Stated Income” loan.

Please call me for more details.

Other Products:

Mortgage Rates This Week: Rates at 19-month lows!

Despite all the talk about the Fed raising the Fed Funds rate soon and interest rates predicted to rise, mortgage rates have fallen in the past few weeks, albeit with more volatility.Market volatility is on the increase and will probably get even more so between now and the end of the year. With stock indexes at record levels and interest rates at record lows, and crude oil in a freefall so far; those markets are ripe for wide swings. The U.S. stock market is about the only place in the world that offers hope for profits, crude oil likely to fall more in an extremely volatile trade that we expect to begin any day now with a huge short-covering move (it is way over-sold), interest rates should remain low and possibly move lower. Like the US stock market, the US debt market is the best place to go for safety and higher rates than other G-7 countries. Mortgage-Backed Securities are part of the US debt market.

Freddie Mac Interest Rate Survey:

This weeks’ Freddie Mac survey announced that the average rate for a 30-year fixed rate loan of $417,000 is 3.93% + .5 points. But, keep in mind that the weekly Freddie Mac Survey is only an average of rate and points offered by surveyed lenders Monday – Wednesday. By the time it is published every Thursday it is old news since mortgage rates change every day. Additionally, lower rates are always available with higher costs and no-cost loans are available with higher rates. And, not everybody is entitled to the same rate. There may be adjustments to anyone’s rate for certain factors such as credit scores, equity, loan amount, length of the lock-in period and many others.

To see what factors are influencing the daily activity of the mortgage market, click on the following link:

We now lend on Commercial Property! I have teamed up with long-time commercial mortgage originator Jeff Redeker to form a new company specifically to finance commercial property. We can finance Multi-Family, Mixed Use, & Office Buildings in addition to handling SBA loans.

Give me a call for any type of Residential or Commercial property loan! And Visit us at BeachCitiesComercial.com